251 So. 3d 362
La.2018Background
- In 2013 Brandon Forvendel was injured while driving his insured Chevrolet and recovered the uninsured motorist (UM) limits under his own State Farm policy.
- Forvendel lived with his mother, Deborah, who had a separate State Farm UM policy with higher limits; State Farm denied stacking under La. R.S. 22:1295(1)(c).
- Forvendel pointed to a 2007 accident where State Farm paid UM benefits under both his policy and his mother’s policy and produced a 2008 letter stating he “does qualify as an insured” under his mother’s policy.
- State Farm’s representatives later testified the 2007 payment was an error; no nonwaiver agreement was executed in 2007 and no notice of error was given to the insured then.
- The district court awarded Forvendel damages beyond his policy limits; the Fifth Circuit (La. Ct. App.) affirmed, finding State Farm waived defenses by making the 2007 payment.
- The Louisiana Supreme Court granted certiorari and reversed, holding the prior erroneous payment did not waive State Farm’s defenses to the 2013 claim and rendered judgment dismissing Forvendel’s claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insurer’s erroneous payment on a prior claim can waive coverage defenses on a later, separate claim | Forvendel: State Farm’s 2007 payment and statement establishing him as an insured waived its right to assert anti-stacking defenses in 2013 | State Farm: A mistaken or negligent payment on a prior claim does not waive coverage defenses for subsequent claims and can be reclaimed under Louisiana Civil Code arts. 2299–2305 | Court: No waiver. A prior erroneous payment does not bar asserting defenses on a later claim; judgment for State Farm. |
| Whether Steptore waiver principles apply across separate, earlier claims | Forvendel: Steptore supports waiver from insurer conduct even if conduct occurred in earlier claim | State Farm: Steptore concerns waiver within the same proceeding; it should not extend to independent, prior payments | Court: Declined to extend Steptore beyond its facts—Steptore is distinguishable and inapplicable here. |
| Whether allowing prior payment would effectively preclude insurer from future statutory defenses (anti-stacking) | Forvendel: Past conduct created reasonable belief State Farm would not assert anti-stacking | State Farm: Applying waiver would produce absurd, indefinite preclusion and conflict with Civil Code provisions on mistaken payments | Court: Agrees with State Farm; accepting plaintiff’s view would improperly foreclose statutory defenses permanently. |
| Whether insurer may reclaim erroneous payments or contest later claims under Civil Code | Forvendel: Payment signaled relinquishment of defense | State Farm: Civil Code allows reclaiming payments and does not estop insurer from contesting subsequent claims | Held: Civil Code and Fifth Circuit precedent support insurer’s right to contest later claims despite prior erroneous payment. |
Key Cases Cited
- Steptore v. Masco Constr. Co., 643 So.2d 1213 (La. 1994) (waiver where insurer assumes/continues defense in same proceeding despite facts indicating noncoverage)
- American Int’l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254 (5th Cir. 2003) (erroneous payment on one claim does not waive right to contest coverage on subsequent claim; civil-law payment-recovery principles apply)
- Dear v. Blue Cross of Louisiana, 511 So.2d 73 (La. Ct. App. 1987) (insurer’s erroneous payment does not bar later recovery of amounts paid for excluded loss)
- Peavey Co. v. M/V ANPA, 971 F.2d 1168 (5th Cir. 1992) (waiver principles when insurer assumes defense in face of facts supporting denial of coverage)